These three IT shops upgraded systems for different reasons, but getting the business involved was key for them all. By John Brandon

Legacy applications are one of the most difficult issues to face within IT. A rip-and-replace approach is expensive and thus difficult to justify; plus, it tends to interrupt operations. Meanwhile, the aging software lingers in accounting's ledgers, overstays its welcome in sales and causes poor network performance throughout the organization.

And it gets worse. An old mapping application in a transportation department, for instance, is a disaster waiting to happen. As the months and years go by, the application grows more outdated and the problem becomes harder to address.

In the examples below -- each featuring a slightly different legacy application problem -- the key to finding a solution involved business analysis. IT staffers helped figure out how the legacy app was being used, in what ways employees depended on it and how the company would be affected by a disruption in service if the software were to fail. Such failures, of course, typically lead to a loss of productivity that continues during the time needed to install new software and train employees to use it.

"A core element in all these cases is that the existing portfolio [of IT applications] ought to be continuously managed for its balance of delivered value to cost and risk," says Jim Duggan, a Gartner analyst who studies enterprise IT applications.

Of course, how these companies balanced the value of software against its cost and the risk of failure, and the factors that pushed them to finally make an upgrade, varied depending on the specific business need and the exact nature of the legacy app problem.

Hudson's Bay Company and Lord & Taylor

Problem: A merger renders existing ERP systems obsolete.

Solution: Wholesale ERP replacement to meet the needs of all divisions.

Hudson's Bay Company, established in 1670, is one of the oldest retail chains in Canada. The company also owns other popular chains, including Home Outfitters and Zellers. In 2008, Hudson's Bay was purchased by NRDC Equity Partners, which owns Lord & Taylor, an upscale department-store chain.

Together, the two companies employ about 75,000 people and generate more than $8 billion in sales, so the merger presented some challenges. One was the fact that Hudson's Bay and Lord & Taylor were both happy with their respective ERP systems, which came from different vendors, but neither system could handle the needs of both organizations. (The previous systems, which Hudson's Bay declined to name, ran on IBM mainframes.)

One of the main purposes for which Hudson's Bay uses ERP is to manage deliveries to its stores. "When we order merchandise from a vendor, sometimes it comes in from Europe and we know about how many we need by store, but it might be months before it is delivered to our company," says Dan Smith, CIO of Hudson's Bay. The resulting delay, he adds, "may change how much you need for one store versus another." Store employees often have to wait until the merchandise arrives, open the containers and then route them to other stores as needed, he explains.